'Excess profits' at big energy and consumer companies pushed up inflation,report | Hacker News Reader

'Excess profits' at big energy and consumer companies pushed up inflation,report

cnbc.com

42 pointsmarifi10 comments

> Major companies in the energy and food sectors amplified inflation in 2022 by passing on greater cost increases than needed to protect margins, according to a new report.

>This does not necessarily mean that overall profit margins have risen, but it does mean that higher prices have been shouldered by consumers, the authors said.

Sounds like the profit margins are the same, but because the absolute numbers are higher for everything, the absolute number for profits is higher as well. That actually seems like what is expected to happen during inflation where the prices across the economy go up by some multiple.

Which implies the causation in the title is backwards.

No such thing as excess profits in a free market...

The consumer exists to have money extracted from them. Of course prices should rise as high as they possibly can.

A system with truly "free markets" in a hypothetical economic system will have perfect competition [1], which includes zero cost to enter and exit markets, large numbers of buyers and sellers, rational buyers, perfect information, and profit maximization of sellers (among other attributes). In this hypothetical model sellers cannot capture excess value because competitors will take that opportunity to capture larger market share.

Excess profit capture represents market failure or disruption.

[1]: https://en.wikipedia.org/wiki/Perfect_competition

won't someone have to go around making sure that all the competition is above board, and that cartels aren't being formed by big players to maximize their collective profits? A person who might regulate such things.

Utility companies in the US are, for the most part, government sponsored monopolies. Nothing "free" about this market. The same goes for internet providers.

“Big energy” is referring to the oil and gas industry. Utility profits are small potatoes.

no such thing as a free market

I take it you skipped your Econ 101 course the day they went over “rent seeking behavior” and the distinction between accounting profits and economic profits. Economic profits (ie. excess profits) are a characteristic of markets lacking sufficient competition. Considering US antitrust laws haven’t been enforced since the Clinton administration, this finding on excess profits would not surprise any honest economist (ie. not on the payroll of a far-right think tank). The M&A spree of the last 30 years has been a mass pillaging of the American working class.

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